Case study: Premium TV enjoys some retail therapy - February 2004  

Premium TV (PTV) is Europe's largest digital sports publisher operating soccer club websites for 80% of English Premier League, Football League and Scottish Premier League clubs in the UK. Much has made in the press of PTV's parent company NTL filing for Chapter 11 bankruptcy and the impact this will have on PTV. However, the restructuring of some of PTV's major interactive media deals combined with bullish results from its online merchandising operations means PTV is feeling positive about the future.

With 2m registered users and 50,000 paying subscribers, PTV claims to own the largest database of soccer fans in Europe. Central to its business is the delivery of broadband, audio and text soccer content to fans, plus mobile content services through its 'World' service. The company also provides soccer clubs with centralised commercial services that generate subscription, broadband, mobile, e-commerce, betting, advertising and sponsorship revenues.
"The revenue that is coming into the business through subscription services is significant," says Oliver Slipper, commercial director of PTV, speaking to Sport and Technology. "And that's partly due to some of the broadband co-marketing deals we have in place." Such arrangements include the broadband content and acquisition agreements PTV has with former parent company NTL (PTV is now a subsidiary of NTL Europe which is a separate company), and AOL UK. Through the latter deal, AOL is offering its broadband customers a free 12 month subscription to one of PTV's club websites. In return, heavyweight advertising and promotional campaigns under the banner 'Better with Broadband' run across Premium TV's online properties including a series of splash screens, flash video, editorial promotion and banner ads.

Successful shopping

At present, e-commerce is the smallest of PTV's revenue streams - it receives a commission on merchandise sold through its system - but Slipper expects this to grow significantly during 2004. "Consumers now have more confidence in buying online and some clubs have made improvements to what had been poor e-commerce technologies in the past." Since PTV has taken over the running of English Premier League side Newcastle United's online store, it has converted offline shoppers into online ones. In 2002, 15% of kit ordered before the start of the 2002-03 season was bought online, with 85% buying it offline. This was completely reversed for the 2003-04 season resulting in 85% pre-ordering their team shirts via the internet.
Newcastle United is not the only soccer club whose e-commerce fortunes have improved. "Sales have soared since the introduction of the new site, which offers supporters an attractive and easy to operate shopping experience," says Richard Gould, commercial director at English second division side Bristol City FC. "Our old online shop provided only a small percentage of total sales, but the new site is now fast becoming a major source of income, with much of it being new business."
Mike Pink, retail manager of Bristol City's promotion rivals Queens Park Rangers, is also pleased with the PTV club shop solution: "We have seen a major improvement in online shop sales. Its not only down to the team doing so well this season, our increased product range and excellent shop user interface are driving the sales. The feedback from our supporters has been very complimentary and this has been reflected in our turnover online, especially during November and December 2003."
The internet provides clubs with an ideal opportunity to target fans says Slipper. "If a club has a sale on medium-sized shirts for example, it can e-mail all the fans it its database that are registered as medium with a special offer. There has been a huge increase in initiatives like these."

Vital statistics

During the 2003 festive period, the 15 online club shops that PTV manages using Microsoft commerce server 2002 technology, generated more than £1m in sales, which is up from £350,000 in 2002 - an increase of almost 300%. Of the 92 clubs in the English Premier League and Nationwide Football League, 89 have an online club shop. With its 15 shops in hand, PTV is now the biggest provider of online shop technology to the soccer market in the UK with a further 10 clubs already scheduled to launch in 2004.
According to PTV, online club shop sales have grown steadily and on average now account for over 10% of all soccer club merchandise sales. This figure is estimated to grow to 25% by the end of 2005.
By the end of 2004, PTV predicts that online club shop sales could overtake the traditional soccer club mail order telesales and catalogue sales businesses. At present, on average, online sales represent around 35% of clubs' overall mail-order business.
The PTV top sellers during the 2003 festive season were:

1. Home Shirt (40% of sales)
2. Away Shirt (25%)
3. Training Wear (10%)
4. Ladieswear (5%)
5. Gifts/Souvenirs (5%)
6. Other (15%)

According to PTV figures, soccer fans are now spending more online than ever before. In 2003, the average online club basket value was £70, up 55%, from £45 in 2002. With a boom in women of all ages watching and playing soccer, sales of women's soccer merchandise grew rapidly in 2003 and reached approximately £100,000. Sales of soccer merchandise are set to grow even further in 2004 thanks to the UEFA European Championships in Portugal.
Slipper believes that soccer clubs in general have been slow to capitalise on the huge growth in online shopping over the past two years. Online retailing industry body Interactive Retail in Media Group (IMRG) says that the UK's online shoppers spent a total of £1.324bn in December 2003, up 70% on December 2002. Combined with November's figures, a total of £2.5bn was spent via the internet in the 2003 holiday period.
While PTV recognises that the UK's soccer e-commerce market is a drop in the ocean at present, its data highlighting the growth in online sales is sure to make an impact. Says Slipper: "These figures will resonate around club boardrooms and reinforce the importance of having an effective e-commerce strategy. The majority of clubs are still underplaying the revenue-generating potential of online shopping as well as the huge cost savings an online shop can deliver." Slipper emphasises the "already large, fast-growing customer demand, which represents a key potential revenue growth area for clubs across all divisions."

The future for PTV

Having established itself as an interactive solutions specialist within soccer, PTV is keen to sell its services to other properties. "We have now built a platform that is resilient and reliable," explains Slipper, "we could take on clients in other sports, or even outside sport, at a relatively low cost to them as the economies of scale of bolting on one new site to 80 existing sites would be significant." PTV recently signed a deal to run the soccer tournament Carling Cup website on behalf of the brewery. "That's our first foray outside of the pure football [soccer] club relationship."
Looking ahead, mobile services are expected to provide PTV with its largest revenue growth over the next three years says Slipper. "I can even see mobile revenues overtaking those of subscription content as our biggest revenue stream. However, technology will be the key driver for these services rather than consumer demand." Slipper can envisage a demand for a mixture of content on mobile services - "goal alerts by SMS, with occasional voicemails from the team manager, or key shots by MMS or perhaps a photo of a player signing at a press conference".
Meanwhile, Slipper awaits the mass roll-out of 3G phones with excitement. "Once all the 3G phones are rolled out by the end of 2005, a mass market will be created for the delivery of multimedia content to football fans." And that prospect can't fail to appeal to PTV.

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